Baku, Azerbaijan, Sept.17
By Leman Zeynalova – Trend:
OPEC and non-OPEC, looking at the current production situation, will not be able to fully offset falling Iranian supply around November 2018, Cyril Widdershoven, a Middle East geopolitical specialist and energy analyst, a partner at Dutch risk consultancy VEROCY and SVP MEA-Risk, told Trend.
He pointed out that the latter situation, taking out most probably a vast part of the Iranian oil exports, and gas too, is leading to a possible supply crunch.
"The well documented but overstated capabilities of Saudi Arabia, UAE, Iraq and non-OPEC’s Russia or US shale are still an issue. At present, Saudi Arabia’s expected spare production capacity is still seen as the main solution, while the last decades Saudi has never been producing at higher levels than current. The documented spare capacity is not proven, but only on paper," said the expert.
He noted that the existing oil export and transport infrastructure is also not ready to cope with a higher supply of 12.0-12.5 million bpd. "Looking at last months, Saudi Arabia has only been partly exporting higher figures than before, which also have been supplied by existing oil in storage."
Iraq, UAE and other OPEC producers’ capabilities are also at present overestimated or politically induced reported. Some increases could be done still, but infrastructure issues and potential other political situations, such as currently in Iraq, will have a negative impact soon, according to Widdershoven.
Libya and Venezuela could also still have a direct negative impact, only leading to additional shortages in the short- and midterm, he said.
"US shale is not a swingproducer, while shale companies are already facing a hefty financial debt situation. Additional volumes are maybe still possible, but real question here is will they be able to reach the market or global clients. Infrastructure to transport in US is not available and already filled to the top."
At the same time, Widdershoven believes that analysts should have a real look at the particular quality of Iranian crude oil.
"According to last assessments these volumes and qualities will be hard to supplied by others, especially when looking at Asian clients. Available spare capacity is not Iranian quality at all."
He believes that not trying to start an intra-OPEC war, Saudi Arabia, UAE or even Iraq, would be very interested to fill in the gaps.
In contrast to OPEC statements, when Iranian oil will disappear from the market, other OPEC suppliers will be filling in the gaps, said the expert. "Possible gains are already calculated in for Aramco in Europe and Asia, while Russia, even if a supporter of Iran, is also bidding for additional volumes in Europe or Asia, taking over former Iranian clients."
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